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Introduction

1 The private sector exploration statistics appearing in this publication have been collected and compiled from the Mineral Exploration and Petroleum Exploration quarterly censuses conducted by the Australian Bureau of Statistics. This publication contains actual and expected exploration expenditure.

Scope and coverage

2 The Mineral Exploration and Petroleum Exploration censuses cover private enterprises known to be engaged in exploration in Australia, in Australian waters, in the Joint Petroleum Development Area (JPDA), and in Areas B and C previously recognised under the Timor Sea Economic Cooperation Zone (referred to as the Zone of Cooperation (ZOC)), regardless of the main activity of the explorer.

3 The Joint Petroleum Development Area (JPDA) is an area in the Timor Sea, about 500 km north west of Darwin. The JPDA consists of the area previously referred to as Area A of the Zone of Cooperation (ZOC). A Treaty was signed with Indonesia in 1989 to enable exploration for and development of petroleum resources in this area. Following East Timor's separation from Indonesia, arrangements have continued on a transitional basis from 25 October 1999 with Australia and the United Nations Transitional Administration in East Timor (UNTAET) on behalf of East Timor. These arrangements were terminated when East Timor became independent on 20 May 2002.

4 Australia and East Timor have agreed on a Framework Arrangement to form the basis of a Treaty to come into effect on East Timorese independence. Under this Arrangement, the JPDA will be controlled by a designated authority which will report to a Joint Commission, with a Ministerial Council to provide oversight. Ninety per cent of resources in this region will belong to East Timor and 10% to Australia.

5 Future arrangements for Areas B and C, in the former Zone of Cooperation have not yet been determined. Under the original agreement, Area B is controlled by Australian authorities, but UNTAET must be notified of any changes to tenements in the area and will be paid 10% of resource rent tax revenues collected by Australia from corporations producing petroleum. Exploration expenditure in this area has been included with the Western Australia data. Area C is controlled by UNTAET, but Australia must be notified of any changes to tenements in the area and will be paid 10% of Contractors Income Tax collected by UNTAET from corporations producing petroleum. Exploration expenditure in this area is excluded from the data.

6 The tenements in the Ashmore and Cartier Islands are administered by the Northern Territory Department of Mines and Energy. Therefore all petroleum exploration expenditure in this area has been included with the Northern Territory data.

Seasonal adjustment

7 Seasonal adjustment is a means of removing the estimated effects of normal seasonal variation from the series so that the effects of other influences can be more clearly recognised. Seasonal adjustment does not aim to remove the irregular or non-seasonal influences which may be present in any particular series.

8 These irregular influences that are volatile or unsystematic can make it difficult to interpret the movement of the series even after adjustment for seasonal variation. This means that quarter-to-quarter movements of seasonally adjusted estimates may not be reliable indicators of trend behaviour.

9 Seasonal factors are reviewed and revised annually to take account of each additional year's original data. The nature of the seasonal adjustment process is such that the magnitude of some revisions resulting from the re-analysis may be quite significant, especially for data for more recent quarters.

Trend estimates

10 The smoothing of seasonally adjusted series to create trend estimates reduces the impact of the irregular component of the seasonally adjusted series.

11 The trend estimates are derived by applying a 7-term Henderson moving average to the seasonally adjusted series. The 7-term Henderson average is symmetric but, as the end of a time series is approached, asymmetric forms of the average are applied. Unlike the weights of the standard 7-term Henderson moving average, the weights employed here have been tailored to suit particular characteristics of the individual series. While the asymmetric weights enable trend estimates for recent quarters to be produced, it does result in revisions to the estimates for the most recent three quarters as additional observations become available. There may also be revisions because of changes in the original data and as a result of the re-estimation of the seasonal factors.

12 Information Paper: A Guide to Interpreting Time Series, Monitoring Trends, an Overview (Cat. no. 1348.0), can be obtained by contacting Time Series Analysis Canberra on (02) 6252 6345 or e-mail timeseries@abs.gov.au.

Expected exploration expenditure

13 Expected expenditure is collected in June and December quarter each year. Businesses are asked to report their expected expenditure for the next six months.

14 From the June quarter 2000 publication, the basis for the expected mineral exploration expenditure series changed. Prior to June 2000, the expected estimates released were simple aggregates of data compiled through the quarterly Mineral Exploration collection. However, these aggregates underestimated actual expenditure to a fairly consistent degree. The consistency with which the published data underestimated actual expenditure suggested that adjustments to improve the accuracy and usefulness of the estimates of expected expenditure would be possible.

15 In the period since June 2000, such adjustments have been made to reported expected exploration data resulting in estimates which better predict actual expenditure for the same period. For more information regarding the adjustments made to the Expected Mineral Exploration Expenditure series, see the feature article in Mineral and Petroleum Exploration Australia June quarter 2000 (Cat No 8412.0).

Tax reform

16 Goods and Services Tax (GST) which came into effect on 1 July 2000 is not included in the value of exploration expenditure. Enterprises in the censuses are asked to report actual expenditure based on the expected net cost to them under the New Tax System. That is, the Wholesale Sales Tax no longer applies and the exploration expenditure estimates should exclude the 10% GST where this amount can be returned to the business as a tax credit. The GST replaced the wholesale sales tax (WST) which was included in the value of exploration expenditure estimates for periods up to June quarter 2000.

Acknowledgment

17 ABS publications draw extensively on information provided freely by individuals, businesses, government and other organisations. Their continued cooperation is appreciated: without it a wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence as required by the Census and Statistics Act 1905.

Related publications

18 Users may also wish to refer to the following publications which are for sale and available on request:

• Australian Business Expectations (Cat. no. 5250.0)
• Private New Capital Expenditure and Expected Expenditure, Australia (Cat. no. 5625.0)
• Australian Mining Industry (Cat. no. 8414.0)
• Mining Operations (Cat. no. 8415.0)